tv [untitled] August 1, 2012 11:30pm-12:00am PDT
done a tremendous amount of work on this. kansas feel like there should have been some effort to speak with him about these amendments before bringing it to the board. my hope is that it could be addressed in trilling legislation so i will be supportive of not continuing this item. i feel like it is too last minute. president chiu: any further discussion? >> supervisor avalos, aye, supervisor campos, aye. president chiu: no, supervisor chu, no. supervisor cohen, no,. supervisor elsbernd, no.
supervisor farrell, no. supervisor ow levy, no -- olague, no. supervisor mar, no. supervisor wiener, no. president chiu: a roll call vote on the motion to continue. supervisor cohen, aye, supervisor elsbernd, aye. supervisor farrell, aye. supervisor kim, aye -- no. supervisor kim, no. supervisor mar, aye. supervisor wiener, aye. president chiu: it is 2:50 p.m.
i would like to go to the 2:30 p.m. special orders. could you call the first hearing? >> items 45 through 46 for public hearing to consider amendments to the initiative ordinance amending the business and tax regulations code. generating $28.50 million in estimated additional revenue. president chiu: this is a hearing to consider men -- amendments that were made last week to the gross receipts tax that is being proposed for the november ballot. i would like to ask if there are members of the public that wish to speak to these amendments, if you could please step up to the microphone. >> i wanted to quickly thank supervisor avalos, supervisor
chui, members of the budget committee, and the mayor's office and the comptroller's office for yeoman's work the last six or seven months in developing alternatives and going through a process of dozens of meetings with hundreds of taxpayers. sometimes you should not wish for something that happens and we talked about getting rid of the payroll tax for decades and we're on the verge of we think you for the work and look forward to this measure going on the november ballot. president chiu: next speaker. >> steve adams, san francisco small business commission. since we first -- our first hearing in april, the commission has been supportive of abolishing the payroll tax and implementing proceeds -- gross receipts. we held five hearings on this and at the time, the commission strongly urged the mayor to modify the initial proposal to recognize that business is making over $1 million are more
likely to be profitable and are in better position to pay the tax rather than smaller businesses. the commission is pleased that you took this into consideration. we're also very pleased that you took our business -- the registration fee to be also proposed and you took those into consideration as well and we thank you for that. on behalf of the commission, we want to thank the mayor, president chiu, supervisor avalos for coming to a consensus on this. this is very good for the city. we also want to think controller been rosenfeld, -- ben rosenfeld and ted egan. thank you for coming together and doing good for the city and county of san francisco.
president chiu: next speaker. >> good afternoon. as you well know, there have been numerous attempts over the course of the last decade or so to reform the city's business tax. the payroll tax has been viewed as a disincentive to job creation. we believe that this is a well crafted solution. it is amazing. i have to give a lot of kudos to the controller and the staff and chief economist as well as supervisor chiu and the mayor's office and supervisor avalos. coming in this -- together in this way is a way to make comprehensive public policy and this is a great way to chart a path for the city moving forward. i forward, so i encourage your support. president chiu: thank you. next speaker. >> my name is eugene gordon, jr., and from the position of
colonialism, now and imperialists nation, the u.s. a, articles are needed to begin the capital currency class, which 2012 now surrounds planet earth, sovereign nations with military bases, protecting its interests where government, federal, state, local, financial issues, which now consumes time and it natures planet earth -- and nature's planet earth. this has not ended this beautified education of finance capital into a major's materials science, a means of production costs, basic needs.
witness the radiation of fascism, to come together, capital currency, class rank divide, speculation, gaining. supervisor mar: thank you. next speaker, please. >> ♪ you are the tax man yeah, you are the tax man and you are looking, watching you, relax, man, because you are the tax man yeah, you are the tax man, and
we are going to phase out you ♪ supervisor mar: thank you. next speaker. >> i became a business owner when i was 16 years old. i applied for my business license, and i feel like this is a huge step forward for san francisco because, i mean, as it is, we are the only city in america that charges in please come i mean employees -- employers per employee on their taxes, and i feel it definitely needs to change because it hinders businesses as well as african americans from being employed because i would not have a job if it were not for african american businesses, my mother, specifically, and i
just want to congratulate you all. supervisor campos: is there any other member of the public who would like to speak? seeing none, we will go ahead and close this. items 45 and 46. if not, the hearing has been closed. supervisor avalos: >> i just want to congratulate the mayor and the controller for their great work, reaching out to the business community and really crafting a measure that i think is fair. it will hold up to the test of time. i am very excited that we have a
measure that is actually going to be exempting small businesses that have gross receipts below $1 million. to me, that is significant. it is about how we will be creating the kind of tax structure that we have made here and there with exemptions we have made to small businesses. this is something we can make wholesale at the same time bringing revenue in at the high- end in a progressive way. i think it meets the values of san francisco, and i am eager for this measure. i also want to talk to you about the consensus to come to get around this measure. we had the dissolution of the redevelopment agency earlier this year, and we have as a response the housing trust fund moving forward that is related to this new business tax measure, the gross receipts tax, and if we did not have, if it was business as usual here in
san francisco, we perhaps would have gridlock that would not be able to get to the next step in terms of how we are able to meet our obligations and looking at our obligations about supporting communities and supporting small businesses, and we move that aside. i think it is significant to talk about today, and i am excited that we are on the verge of creating a new system for our business tax. that was made through a great deal of dialogue. the consensus around here, i work with a coalition, a group of community and labor organizations, on the other side that the mayor has worked with and president david chiu has warred with. they have had a great deal of consensus building on this measure as well. i just want to urge you, colleagues, to have your support to move this forward to the ballot. lastly, i wanted to mention the press conference.
yesterday, we went to veritable vegetables. it is a woman-owned company that is wholesalers for organic produce in the bay area, and they have been around for quite a long time, hiring local residents. what the owners said yesterday is that we are happy to pay our taxes, and we get something for our taxes, and i think it is important to not fail to recognize the we're paying for many of the things that government is really about. we have a public infrastructure for muni in transit. that we a public safety and schools. that we have parks, that we're able to mitigate challenges with the divide between rich and poor. how we are going to respond.
this is very important, and the people at veritable vegetables were eager to talk about that yesterday after the press conference, so i am excited that we're moving forward to raise this revenue in these challenges. supervisor campos: president chiu? president chiu: thank you, chair campos. i am glad we're able to come together on this ballot. i have probably done this more than in my first term, and i very much want to thank everyone for coming together, from progressive labor and community groups, for all of the segments of leadership within the business community. numerous kudos, i know, have already gone to our controller and our city economist, but i
also want to thank the city attorney for her work in drafting several versions of this legislation. we hopefully in november will be able to put into place a fair and more equitable business tax system that taxes measures of revenue and profit rather than work force and labor. knowledge that with this measure we are filling what we know in our local economy we need. the goal of tax reform is to assure that we lay the groundwork of thousands of jobs. 750 jobs per year. back on top of the fact that we are also going to be bringing in more revenues for our city, so this is a win-win-win. i think for everyone in the city, and, colleagues, i would ask today for unanimous support.
supervisor campos: supervisor mar? supervisor mar: thank you. when we were outside on the steps, members of congress and others, but connie ford, representing the council, and many labor organizations, with children and seniors, it made it clear that there is a strong going to be working on this jobs initiative for november. i also want to say that things to supervisor avalos, chiu, and others to bring this together -- thanks to them. this will bring about the revitalization of our neighborhoods, and it is over 10 years of work that went into this, but i think to pass it in november, we will need a grass- roots coalition to make sure we have this revenue, so thanks so much to supervisor avalos,
president chiu, and mayor lee. let's pass this in november. president chiu: supervisor chu? supervisor chu: i know this is something that was talked about for years. i was one of the doubters that we could put something together this major for business reform on the ballot, and going to the press conference today and seeing labor and the chamber of commerce and the small businesses and various members of the board of supervisors was really inspiring for me actually, and i am just happy to see we are able to come to conclusion on this issue, that it was not as divisive i thought it would be, but i know a lot of work went in to make that happen. anytime there is a coalition that is this broad, there is a tremendous amount of effort that goes into making it happen. i want to thank all of the parties involved, and i want to
thank the mayor's office, our board president, and supervisor avalos. the mayor asked today who this will benefit, and i think it will benefit every san franciscan. we talk about how we are lightening the load for some of our small businesses. we are lightening the load for some of the businesses that want to grow, but at the end of the day, we are also talking about a greater investment in our city, and that could go towards schools or parks, public safety efforts. i just think in general, this is a win for the entire city, and i look forward to supporting this on the november ballot with the recreation and parks bond. this will be a better place for everyone. the last thing, this is in companionship with the housing trust fund. $13 million of this gross receipts tax will go towards affordable housing. that means less people on our streets and in substandard
housing. all of that is an incredibly important investment. all along with recapturing the redevelopment tax element that we put together in a housing trust fund that is also moving forward to the voters, so again, i am excited and proud to support this, and i just want to thank the leadership and all of the members of the coalition who made this happen. president chiu: supervisor cohen -- olague? supervisor olague: i want to add my support to this. they are coming together to really hold the bar at a certain level, and to the mayor's office for coming in meeting us half way, and the business community also for being able to work toward something that was
agreeable to all, so i'd think this really is a win-win. we managed to achieve it here through this measure and also threw the housing trust fund. it was a similar process where we had two very opposite groups coming together to meet, to try to get to a place where we can all come to some agreement, and at the end, i think it is better for the city, so i am just happy to be supportive of those. president chiu: supervisor campos? supervisor campos: thank you very much, mr. president. before i speak, i want to take this opportunity to ask the chair, if i may, for the budget analysts, if they can talk about a report that they conducted for me. as i indicated at the last meeting that we had, this is one of the most important decisions that we are making, perhaps the
most important decision that we have made since i have been elected to the board talking abg our tax structure, and i was surprised that no analysis had been requested of the budget and lead this latest -- the budget and the legislative analyst. i think it is important to hear from mr. rose briefly on the work that they have done in the last few days and just some of the key points in their report. again, i want to thank mr. rose and his staff for very expeditiously getting that, and i think his work is something that is very important information to add to the record, but also to this discussion, so if i may, if i can ask harvey rose? president chiu: mr. rose? >> president chiu, supervisor
campos, supervisors. in the first paragraph, we say that businesses pay an annual fee ranging from a minimum of $25 to a maximum of $500 based on the amount of their annual payroll, and that is shown in table 1 of page 5 of our detailed report. beginning in 15-16, the annual fee would increase by $65, for $25 to $90. that is an increase over 200% for all businesses except for some, where the fee would increase by $50, from $25 to 7 $5, and that is an increase of 200%. secondly, we point out that small businesses with an annual payroll of $250,000 or less pay an annual registration fee of
$63 to 4 cents on average under the current registration fee. if the ordinance is approved by the board of supervisors, submitting it to the electorate, all businesses with annual gross receipts of $1 million or less would pay an annual registration fee of $145.76 on average, an increase of 129.4%. we also point out that the business registration fee revenues would make up a larger share of the total business tax revenues, including both the annual business registration fees and the annual gross receipts taxes under the proposed ordinance that will be submitted to the voters. the revenues will increase by about $28.50 million, from 8.7 million in 2012-2013. this is based on the estimates of mr. rosenfield and eagen, and
finally, as we point out, the existing exemption from paying the payroll tax by businesses having an annual payroll of $250,000 or less, currently a certain percentage of businesses, 8196 in 2011 to 2012 paid the payroll tax. apparently 16.4% of the businesses or 15,553 of about 95,000 businesses would pay the gross receipts tax based on the controllers estimate. therefore, an estimated 7357 or 89.8% more small businesses which presently are not paying the payroll tax would have to pay the gross receipts tax under the proposed ordinance, and ms. campbell and i would be happy to respond to any questions. president chiu: supervisor campos?
supervisor campos: thank you. mr. rose, i do not get any questions but want to thank you and your staff for looking into this matter. i want to reiterate the importance of this work. it is something that all of us should be proud of that we are able to come together on something as important as this. i have to say that for me, the issue has not been as easy as it has been for some of my colleagues, and i respect their perspectives, but i have to say that for me this has been one of the more difficult decisions i have had to make, and it is not because i do not believe in the benefits of moving away from a payroll tax system to a gross receipts tax system. to the contrary, i think this is something that needs to be done. but i do have concerns, as i indicated last time, about the
way in which we are doing this. i respectfully submit that i do not think is entirely clear, that we are not going to look back in five, 10, 20 years and wonder why we did it exactly this way, and there are a couple of concerns that i want to highlight today. one is a concern that i noted last time, that if you look at where our current revenue structure is under this proposal, where we are bringing in 28.5 million the first year if this measure passes, i do not believe that that brings us to the level that we needed to be in terms of the revenue that was lost a few years back when the city settled a lawsuit and changed its current structure. but the estimates i have seen, you're talking about at least $30 million in revenue needed
for us to come back to that level, and the $28.50 million in the first year certainly falls short of that. the second point that i make is that i do have a concern about the fact that we are mixing the issue of the housing trust fund, the affordable housing trust fund, and the gross receipts. as was noted by supervisor kim, of the $28.50 million that we are talking about for the first year if this measure passes, $13 million of that will go to affordable housing, which is a good thing, but that means that only $15 million will be injected back into the general fund for the general use of the fund, and i do not think that that takes us far enough, and i certainly wish that the number was higher. i also think that to the extent that you can make a connection between affordable housing in gross receipts, to the extent that some of these businesses
are taking responsibility for the increase type cost of living in san francisco, i do not know that $13 million in affordable housing fees money goes far enough. we are certainly seeing already that housing prices are going up. in my district, they are going up exponentially, so i do have a real concern about that, but the second overarching concern is that a concern that was highlighted by the report from the budget and legislative analyst, harvey rose. there are different ways in which we can implement a gross receipts system, and the way we have chosen to do it is to make it revenue neutral in that to the extent that additional revenue is brought into the system, we are focusing on the business registration fees, and as was noted by the budget and
legislative analyst, what we are talking about is seeing a very significant increase in business registration fees. my fear is that to the extent that business registration fees are now in larger part of the tax system, which they are, and that is the tool by which we are increasing revenue, i do believe that this is disproportionately impacting small businesses, and the numbers that the budget and legislative analyst noted our numbers that i have concerns about, and quite frankly, i am a little surprised that this whole business commission jumped on board without doing some of this analysis, but this is what we know. we know that an estimated 7357 small businesses or 89.8% more small businesses will have to pay taxes under this system. again, there will be more of an
impact on small businesses. we also know this will be in larger share of the business tax structure that we have. one thing that i have seen, and i am not an economist, but one that i have seen as a district supervisor is when it comes to creating jobs in this city, it is ultimately the small businesses that are doing that, and so i do have a concern about the disproportionate impact that this could have on small businesses, so i do have trepidation. so the choice for me as a supervisor that is being asked to vote on this today is what do we do? i do believe there are legitimate concerns about the way we are doing it. i do not know that this is necessarily the best approach, but we do have to make a choice, and what i think from my perspective, fmy